As a human being, we all consume products and/or services all the time. This morning you got up and ate your breakfast, e.g., eggs, milk, bread, fresh fruits, and the like. After the breakfast, you drove your car to work or school. At your office, you used your computer, perhaps equipped with 27” LCD monitor. During your break, you drank a cup of coffee and played with your iPhone. So on and so forth. You probably take it for granted that you can enjoy all of these products. But if you take a closer look at how each of these products can be made and eventually delivered to you, you will realize that each one of these is no short of miracle. For example, which fruit do you like? Consider fresh strawberries. In order for the strawberries to be on your breakfast table, there must be numerous functions, activities, transactions, and people involved in planting, cultivating, delivering, and consuming strawberries. Moreover, all of these functions, activities, transactions, and people are connected as an integral chain, through which physical products like strawberries themselves and virtual elements such as information and communication flow back and forth constantly. By grouping related functions or activities, we have a supply chain, comprised of four primary functions such as supplier, manufacturer, distributor, and finally consumer. A supply chain is essentially a value chain.
For the society or economy as a whole, the goal is to maximize value, i.e., to create satisfactory value without spending too much. In order to create the maximum value for the strawberry supply chain, every participant in the chain must carry out its function efficiently. In addition, all of the members must coordinate with each other effectively in order to ensure value maximization. We have to face the same issues for almost all the products and services we take for granted in our everyday life, e.g., cars, hamburgers, haircuts, surgeries, movies, banks, restaurants, and you name it!
In this course, we want to understand fundamental principles of value creation for the consumers or the market. We try to answer questions like how the product or service is made, how the value-creating activities or functions are coordinated, who should play what leadership roles in realizing all these, and so on. As our course title hints, we approach all of these issues from a learning perspective, which is dynamic in nature and emphasizes long-term capability building rather than short-term symptomatic problem solving.

AR

It was a successful course , very clearly and Useful!. I hope that KAIST develop news courses about supply chain management. Thank you very much for share knowledge!

YY

Aug 10, 2016

Filled StarFilled StarFilled StarFilled StarFilled Star

I enjoyed studying the course. Information is given in a very understandable and proffesional way at the same time. I will highly recommend this course.

À partir de la leçon

Management Capability

Effective SCM requires the firm to have strong operations capabilities. One can group various operations capabilities into three representative capabilities: Controllability, flexibility, and integrating capability. In order to be competitive in the market, the firm must retain high levels of these capabilities. In this chapter, we will discuss what the management capabilities are and the relationship among these capabilities.

Enseigné par

Bowon Kim

Professor

Transcription

Okay. We talked about two basic capabilities. One is controlibility. The other is flexibility, and I think everybody agrees that the firm. Must controbility in order to be competitive in the market and at same time to become competative in the market market. And at the same time the company's flexibility, the company would have competitive advantages over its competitors. So the more controllability the better. The more flexibility the better. In other words the company probably wants to pursue these two directions at the same time, all right. On the one hand the company wants to have more controllability. On the other hand, that the company also wants a. More flexibility. So that's only one of the situation. But given [UNKNOWN] resources available given at a given point of time. We must ask a question. Is it possible for the firm to pursue controlability and flexibility at the same time. Always. So, we want to understand whether there might be some, very. Unique sort of relationship between these capabilities. Or, you know, whether we can find or we can identify or systematic relationship between these two. So we want to ask a question about. What is the short term relationship, short term relationship between capabilities? In fact there are differences, there are researchers who took a look at similarities for instance Skinner. Actually postulated a trade-off relationship between competitive priorities. For instance Skinner said that you know, qualities is one of those competitor priorities. And also your [UNKNOWN] or low costs. You know there are several different types of competitive priorities. Then he asked a question about whether it's possible to pursue two different competitor qualities at the same time. Will there be any tradeoff relationship between those two, [INAUDIBLE] not. But actually, what Skinner mentioned was that there is indeed a tradeoff relationship between competitive priorities. There is a case at 3M where the company was struggling with conflicting relationship, or conflicting you know, goals. Of efficiency and flexibility. On the one hand, the company wants to enhance its efficiency so that it can make things at a lower cost. But at the same time, the company was also struggling with issues of creativity to develop a new product. Faster than its competitors, and so on and so forth. All this comes down to the issue of flexibility. You know, how to deal with this uncertainty inside and outside. And there are also other [INAUDIBLE]. And therefore. I think the relationship between controlability and flexibility, is sort of inverse relationship or we'll just say that this is kind of trade up relationship. That is tradeoff relationship between. The two capabilities. Remember that I want to talk about their short term relationship. I'm not talking about the long term relationship. Because in the long run, in theory, everything can change. So we will look at the relationship between controllability and flexibility. In the long run, a little later, but now let's focus on the short term relationship between these two. And I'll just say that there might be some trade up relationship. Of course, as usual, there are many other researchers and you know, scholars who probably say something different. In other words some people might say that you know that you have a flexibility. You needed to have at least, you know, a certain debit of controllability. That's true. That's true. I mean that and probably. We can think about, something like this. A, If controllability level is very low, and also flexibility level is low, then the relationship might be positive. For instance, in this region, maybe, there is, you know, some relationship, something like this. In other words, there might be some. You know, partitive relationship, right? But you know, I don't want to talk about that exceptional case. So just forget about this irregular part of the relationship. And let's say, overall,. In general, in general, in the short run, there might be tradeoff relationship between these two. Then I want to ask questions like why, and why there should be such a tradeoff relationship. One explanation I want to provide is. The fundamental sources, fundamental sources of this capability are different. For instance where comes this controllability? Controlability basically. For instance, efficiencies, basically coming from repetition. [BLANK_AUDIO]. In other words for instance, there is a division of labor, right? Division of labor, this is One of the greatest forces, one of the great forces behind industrial revolution. So repetition, if you repeat a certain activity or a certain function over and over again, efficiency goes up. And also we can say that economies of a scale. Economies over scales is also another source of controlability. If you have huge capacity, then you will have more chance repeat the same function over and over again. And if you have huge capacity, then somehow. You can find ways to improve your controllability. And of course, again, there are, there, you know, it is possible for us to find other explanations. But in general, okay, let's focus on, in general, I would say that You know, economies of scale is more consistent with controllability. On the other hand, how about this flexibility? Flexibility is coming from concurrency, right? Concurrency, in other words Doing some things, doing some things some in tendency. Or let's say that we know that their responsiveness. So these are the forces. These are the forces behind flexibility, behind the flexibility. Flexibility by definition is contradicting deputation. Deputation is very opposite to flexibility. So I'll just say that because of this sources of each of these capabilities are very different. You would just say at least in the short run. At least in the short run the relationship is inverse. In other words there might be some trade off relationship between. These two capabilities. And then I can ask another question. Let's say there are two companies, company a and company b. And say that in terms of effiency. In terms of efficiency. Let's suppose that company a is better than b in terms of efficiency. Having the same level of quality. And also I say in terms of flexibility. Company A is also better than Company b. Let's say that we cannot job this kind of phenomenon. If that is true. Then you might wonder. You might ask. I mean that, you know, you just said there is inverse relationship between control ability and flexibility. And now you're saying that it is possible to observe that. A company is better than another in both efficiency and flexibility at the same time. And the question is, are these two contradicting with each other? I mean that these are contradicting each other. [BLANK_AUDIO]. Or, is it possible for us to explain or contain these two different phenomenon using the same framework. Using the same framework like this. 'Kay. So, that is our question. [BLANK_AUDIO]